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Gasoline Shortages Reported on East Coast

Dozens of gasoline stations from Virginia to Massachusetts ran short of fuel on Friday as suppliers struggled with a transition to a new anti-smog gasoline blend using corn-based ethanol as an additive, marketers said.

The disruptions, caused in part by a lack of trucks to move ethanol to supply terminals, comes amid an already severe spike in retail gasoline prices to near $3 per gallon as the cost of crude hits new highs.

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"The situation here is chaotic," said Mike O'Connor, president of the Virginia Petroleum Jobbers Association, which represents gas stations in the state. He said his association is seeking a federal waiver to allow the sale of lower grade gasoline to ease the crunch.

Fuel marketers said there were reports of gasoline stations running out of fuel in areas of Virginia, Maryland, around Washington D.C., in Philadelphia, Pennsylvania, and parts of Massachusetts.

"There are a handful of outages being reported across the region, but they are temporary," said Catherine Rossi, a spokeswoman for AAA Mid-Atlantic. "The problem is waiting for the trucks to get to the stations." AAA is the largest motoring and leisure travel organization in North America.

The U.S. government had warned in recent weeks that gasoline supplies could be disrupted along the East Coast and in Texas as the oil industry shifts to the new anti-smog blend using ethanol.

"We're going to see some problems" in the short-term, Energy Secretary Sam Bodman told reporters on Friday.

Gasoline producers had previously used additive MTBE to make reformulated gasoline, required at a third of the nation's pumps to combat air pollution, but are phasing the chemical out because of the risk of lawsuits after several states banned it for contaminating groundwater.

The problem with the replacement additive, experts say, is that ethanol cannot be shipped in pipelines because it absorbs water condensation in the pipes, and requires trucks, rail cars or barges for transport.

"Anywhere there is reformulated gasoline and MTBE there will be a problem," said Jeff Lenard, director of communications at the National Association of Convenience Stores.

A federal waiver allowing the sale of conventional gasoline, instead of the anti-smog blend, would make it easier for fuel suppliers to sell gasoline without the ethanol additive.

"We're patiently waiting to see if the state will make a formal request on our behalf," said VPJA's O'Connor.

The Petroleum Marketers Association of America, which represents stations selling about 55 percent of the nation's gasoline, said it was unaware of any other state associations seeking a waiver.

"We're hoping this situation will be short-lived," said Rolf Hanson, executive director of the Pennsylvania Petroleum Association. "We think it is unlikely the government will grant waivers for a transitional issue like this one."

State officials from Virginia and Maryland said they were not yet ready to formally request a fuel waiver from the U.S. Environmental Protection Agency.

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